When computing profit on an after-tax basis,it is necessary to multiply the pretax profit by (1 - effective tax rate).

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Quizplus · Accepted Answer

This is true because the effective tax rate represents the percentage of pretax profit that is paid as taxes. Therefore, to calculate the profit on an after-tax basis, we need to subtract the tax amount from the pretax profit. This can be done by multiplying the pretax profit by (1 - effective tax rate) to get the after-tax profit.

When Computing Profit on an After-Tax Basis,it Is Necessary to Multiply